January 2013 Issue No. 197
Independence of the Insurance Authority (IIA) The Task Force on IIA headed by our Governing Committee member Mr Allan Yu has put together a draft submission to the Government. The draft has incorporated comments and observations gathered at the high level focus group discussion jointly conducted with the Hong Kong Insurance Law Association in December 2012. The draft is being circulated to Member Companies for final review before it is presented to the Financial Services and the Treasury Bureau (FSTB) which has kindly agreed to postpone the deadline of submission by two weeks to 8 February 2013. This is a subject of enormous importance to the future of our industry. We want to engage as many stakeholders as possible in the consultation process. Apart from the focus group discussion referred to above, we have met the Insurance Authority (IA), intermediary groups, the Democratic Alliance for the Betterment and Progress of Hong Kong and the Hong Kong General Chamber of Commerce. Lately, the Governing Committee had lunch with Ms Au King Chi, Permanent Secretary for Financial Services and the Treasury, at which we raised a number of key concerns. And I am glad to say that we had a candid and constructive exchange of views.
Multiplier for Calculating Damages in Personal Injury Cases In March 2012, the Court of Appeal of Guernsey decided to apply a much lower rate of return on damages calculated to cover the loss of future earnings. The lower the rate of return, the larger the damages to be awarded. This may affect how the Hong Kong's court of law decides the damages for claimants, in particular the two personal injury cases currently awaiting the High Court's verdict. At present, the standard 4.5% discount rate for expected investment return is applied. The industry acknowledges the fact that the investment and inflationary environment in Hong Kong over the last decade points to the need to review the current rate to ensure adequate compensation for injured claimants. That said, the review should be based exclusively on long-term economic indicators and any short-term market anomalies in the process should be duly discarded. If the rate should be significantly lowered, and awards in personal injury cases begin to inflate, the cost of claims will go up very substantially. To ensure the whole system remains sustainable, insurance companies will have no choice but to raise insurance premiums accordingly, which will ultimately be borne by policyholders.
(Source: Sing Tao Daily)
The above message needs to be clearly conveyed to the community at large. On this we have done some work with the Actuarial Society of Hong Kong and we are planning to do more.
Renminbi (RMB) Insurance Business and Investment The Task Force on RMB Life Insurance Products is now conducting a survey to try and track the latest development of RMB insurance business in Hong Kong and the progress of the related investments in the Mainland interbank bond market. The results of the survey, together with the proposals and suggestions from our industry, will be presented to the People's Bank of China and relevant regulatory authorities. Thanks to the support of the IA and the hard work of the Task Force, we see good progress being made on this front. And we look forward to securing more investment channels in the Mainland market for local insurers, which is vital to the healthy development of their RMB insurance business.